Japan’s spending dips amid worries over surging prices

TOKYO

Japan’s household spending dipped 2.3 percent in March from a year earlier as the cost of fuel and other items surge, though the fall was smaller than expected.    

The decline was the first since December and due in part to the comparison with a sharp rise in spending a year earlier.    

The decline was smaller than the market consensus of a 3.2 percent drop and comes after a 1.1 percent rise in February and a 6.9 percent surge in January.    

Analysts have warned that the pace of nominal wage increases in Japan is unlikely to track rising prices, dampening spending appetites.    

In March, core consumer prices rose 0.8 percent -- the fastest increase in more than two years -- as oil prices soared.    Excluding energy, however, prices were down 0.7 percent.    

Some manufacturers and stores in Japan who rely on imported resources have begun to raise prices.    

Last month, the Bank of Japan left its ultra-loose monetary policy unchanged, while hiking its full-year inflation forecast.    

The central bank cautioned that it sees rising prices, driven by a surge in commodity costs caused by the Ukraine war, as a temporary and volatile trend.    

And even the current consumer price rise still falls far short of the Bank of Japan’s long-term goal of two percent inflation.